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2021 (12) TMI 801 - AT - Income TaxPenalty u/s 271(1)(c) - search action u/s 132 under the head income from other sources - introduction of share premium and the share capital in the company - income as disclosed during the search and seizure action u/s 132(1) to the tune since not found declared in the original return of income has been added to the total income of the assessee - HELD THAT - As identical cases in deleting penalty imposed by the authorities below and the order passed in the case of PCIT (Central), Nagpur vs. Rajkumar Gulab Badgujjar 2019 (1) TMI 656 - BOMBAY HIGH COURT we find no ambiguity in the order passed by the Ld. CIT(A) in deleting the penalty against the assessee. Hence, the appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed.
Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961. 2. Legitimacy of the penalty imposed for concealment of income and furnishing inaccurate particulars of income. 3. Applicability of Explanation 5A to Section 271(1)(c) in the context of search and seizure actions. Issue-wise Detailed Analysis: 1. Imposition of Penalty under Section 271(1)(c): The Revenue's appeal challenges the deletion of a penalty amounting to ?55,53,800/- imposed under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was initially imposed by the Assessing Officer (AO) following a search action under Section 132 of the Act in the Riddhi Siddhi Group cases, which led to the discovery of undisclosed income amounting to ?1,65,00,000/-. This income was not declared in the original return but was disclosed during the search and subsequently included in the return filed under Section 153C. The AO considered this as a deliberate concealment of income and imposed the penalty, which was later deleted by the Commissioner of Income Tax (Appeals) [CIT(A)]. 2. Legitimacy of Penalty for Concealment and Furnishing Inaccurate Particulars: The AO justified the penalty by asserting that the assessee would not have disclosed the income of ?1,65,00,000/- if not for the search action. The AO cited various judicial precedents to support the imposition of the penalty, emphasizing that the assessee's failure to disclose the income in the original return indicated a deliberate intention to evade tax. The CIT(A), however, relied on the judgment of the Hon’ble Bombay High Court in the case of PCIT (Central), Nagpur vs. Rajkumar Gulab Badgujjar, which led to the deletion of the penalty. 3. Applicability of Explanation 5A to Section 271(1)(c): Explanation 5A to Section 271(1)(c) was a focal point in determining whether the penalty was justifiable. The AO argued that the explanation presumes concealment when there is a discrepancy between reported and assessed income. The burden of proof shifts to the assessee to demonstrate that the income was not concealed. The AO maintained that the assessee failed to provide reliable evidence to rebut this presumption. However, the CIT(A) and the Tribunal found that mere admission of additional income during the search, without corroborative evidence like money, bullion, or book entries, does not suffice to impose a penalty under Explanation 5A. Tribunal's Findings: The Tribunal examined precedents and found that similar penalties imposed on other companies within the same group were deleted in analogous circumstances. The Tribunal referred to its previous orders in cases involving Creelotex Engineering Pvt. Ltd., Safari Biotech Pvt. Ltd., Telecon Infotech Pvt. Ltd., and Vascroft Design Pvt. Ltd., where penalties were deleted due to lack of corroborative evidence supporting the concealment allegations. The Tribunal also noted that solely relying on the assessee's admission during the search without additional evidence does not justify the penalty. Conclusion: The Tribunal upheld the CIT(A)'s decision to delete the penalty, finding no merit in the Revenue's appeal. The Tribunal emphasized that the Revenue's action lacked substantial evidence to prove deliberate concealment of income. Consequently, the appeal filed by the Revenue was dismissed, affirming that the penalty under Section 271(1)(c) was not sustainable in law. Order Pronounced: The appeal by the Revenue was dismissed, and the order was pronounced in Open Court on 25/11/2021.
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